Secured Capital, the Tokyo-based private equity real estate firm, has brought the total capital raised for its fifth opportunistic fund to approximately $450 million, PERE has learned. The firm is understood to be aiming to bring aboard $1 billion come final closing, which is anticipated to happen at the end of next month.
Secured raised the first $195 million for its Secured Capital Real Estate Partners (SCREP) V fund in a first closing held in July last year. That closing comprised predominantly repeat investors from its prior funds. The second closing at about $375 million happened in April and involved a number of new investors to the firm. Since then, Secured is understood to have held a series of closings, bringing its equity total to $450 million.
Should Secured reach its $1 billion target, it would be the largest capital raising managed by the firm since it was formed in 1997 to buy and service non-performing loans in Japan for international investors. The firm has since expanded to raise funds for equity investments in both the commercial and residential asset classes, as well as for core mandates. However, for its main opportunistic fund series, Secured has remained largely faithful to its roots, buying up distressed loans and investing in real estate situations via the financing side of deals.
For SCREP V, Secured has the capacity to put equity to work in China thanks to its merger with Hong Kong-based private equity firm Pacific Alliance Group (PAG) in 2010 via a de-listing from the Tokyo Stock Exchange. Nonetheless, while the firm has invested approximately $200 million of SCREP V so far, it has acquired Japanese real estate debt or debt-related assets almost exclusively. Indeed, PERE understands that the firm regards the current opportunity to acquire property finance in Japan to be such that it is not likely to invest much capital in China from the fund.
There has been one investment made in Australia that involved capital from the fund, a first for the firm. In a joint venture with PAG Secured, it purchased a suburban office property portfolio reported to be valued at as much as A$600 million (€409 million; $543 million) from GE Capital. According to the Australian Financial Review, GE Capital provided vendor finance to the tune of 70 percent loan-to-value as part of a major push into the property lending market in the country.
SCREP V is expected to run for eight years with options for two one-year extensions. According to previous PERE coverage on the fund, its investments are expected to yield IRRs of between 17 percent and 20 percent and a 2x equity multiple. Secured declined to comment.